Wellington City Quarterly economic monitor - June 2019

Overview

Indicator Wellington City Wellington Region New Zealand
Annual average % change
Gross domestic product
2.2%
2.1%
2.5%
Traffic flow
1.2%
1.9%
1.5%
Health Enrolments
2.2%
1.9%
1.8%
Consumer spending
2.7%
4.2%
4.0%
Residential consents
-13.9%
-4.5%
5.8%
Non-residential consents
33.3%
22.1%
7.9%
House prices*
6.2%
8.5%
1.4%
House sales
-2.4%
-1.6%
-0.9%
Guest nights
2.5%
3.0%
1.3%
Tourism expenditure
7.6%
6.8%
3.2%
Car registrations
-10.1%
-8.1%
-8.6%
Commercial vehicle registrations
0.7%
-2.4%
0.3%
Jobseeker Support recipients
3.9%
4.9%
9.6%
Level
Unemployment rate
3.8%
4.0%
4.1%
* Annual percentage change (latest quarter compared to a year earlier)

Overview of Wellington City

Wellington City’s economic performance broadly reflects national trends with Infometrics’ provisional GDP estimate for the city growing 2.2% in the June 2019 year next to a national average of 2.5%. Economic growth in Wellington is being underpinned by population growth, consumer spending growth and tourist spending growth.

Growth in health enrolments in Wellington City, a proxy for population growth, rose to 2.2% in the June 2019 year compared with a national average of 1.8%. Electronic card spending on retail purchases in Wellington City continues to under-perform compared with the national average, growing 2.7% in the June 2019 year compared with 4.0% nationally. The 10%pa decline in car registrations in Wellington City, next to a national average fall of 8.6%, reflects consumers’ unwillingness to make major purchases amidst fears of tougher economic conditions in the next few years.

But tourist expenditure rose 7.6% to an unprecedented $1.934m for the June 2019 year, well above national average growth of 3.2%. Guest nights in Wellington City are also at historically high levels, growing 2.5% in the June 2019 year.

House price inflation remains subdued in Wellington City with prices growing 6.2% in the June 2019 year, due in no small part to a 2.4% fall in sales. Non-residential consents in Wellington City grew 33% in the June 2019 year after a strong June 2019 quarter. The 14% decline in residential consents is largely due to a surge in consents in the 2018 March quarter.

Wellington City’s unemployment rate fell again to 3.8% for the June 2019 year, the lowest rate since the Global Financial Crisis. The number of Jobseeker Support recipients continues to edge higher, growing 3.9%pa next to a national average of 9.6%. With central government funding additional WINZ front-line staff, and reports of a greater focus being put on supporting benefit recipients into work, we are hoping to see the number of Jobseeker Support recipients start to fall in the coming year.

Overview of national economy

The New Zealand economy continues to perform well, but concerns are growing about the future, with a long, slow, slowdown expected over the next few years. The Reserve Bank’s aggressive cut to the official cash rate (OCR) to 1.00% reflects a deteriorating economic outlook as both business and government investment remains poor, inflation remains low, and the employment outlook softens. With slowing population growth expected to eventuate before the end of the year, the focus turns to consumer spending and whether it can prop up economic growth, or if it too succumbs to global and domestic uncertainty.